Should private equity firms apply for a Mifid passport after Brexit?

Author: Olly Jackson | Published: 9 Mar 2018

The new Markets in Financial Instruments Directive (Mifid II) is not usually associated with private equity. Originally implemented in response to the financial crisis, the directive focuses on providing greater transparency and investor protection for bank clients. But some private equity firms and those operating under the Alternative Investment Fund Managers Directive (AIFMD) are also obliged to follow Mifid II rules. As such it’s unclear when a fund manager becomes a Mifid firm and this could present a big problem after Brexit, when firms dealing in Europe may require a Mifid passport.

Many UK private equity firms are set up as investment advisors rather than fund managers with the final decision taken by a general partner that operates outside of the UK. By virtue of being an advisor, these firms would be obliged to follow Mifid rules. Fund managers are regulated under the AIFMD and are therefore subject to looser regulation than private...